US prosecutors urge judge to hand Bitfinex hack mastermind five-year sentence

• The Bitfinex crypto hack resulted in the theft of 120,000 Bitcoin
• Ilya Lichtenstein used a series of sophisticated methods to hide the stolen funds between 2016 and 2022
• He told his wife and co-conspirator about the hack in 2020 who then helped him to hide the stolen assets

US prosecutors have told a judge that the mastermind behind the Bitfinex exchange hack should receive five years in prison.

Ilya Lichtenstein, who pleaded guilty last year after stealing 120,000 Bitcoin, was arrested in 2022. His wife and co-conspirator Heather Morgan was also taken into custody, in connection to the 2016 Bitfinex crypto hack. During their arrest, police seized Bitcoin worth around $71 million at the time of the hack.

According to Bloomberg, a court filing was submitted to the US District Court of Columbia, US prosecutors say Lichtenstein should receive a longer sentence than Morgan, also known as rapper Razzlekhan.

Last week, federal prosecutors recommended that Morgan receive an 18-month prison sentence given her “substantial assistance” in the case and the fact that she didn’t know her husband had hacked into Bitfinex.

Prosecutors argued that a stronger sentence for Lichtenstein would help deter young cybercriminals from attempting the same thing. According to them, this online activity is “normalized in a way that trivializes the impact on the victims.”

By giving a tougher sentence, prosecutors believe it will “help to break this cycle.”

Sole responsibility for the hack

While it was initially believed that both of them were involved in the exchange’s hack, Lichtenstein was identified as the primary person responsible.

It was only in 2020 that Morgan found out about what her husband had done and admitted to helping him hide the stolen crypto. Following the hack, Lichtenstein transferred around 120,000 Bitcoin into a self-custody wallet under his control.

Over the next few years, he withdrew 25,000 Bitcoin, laundering the stolen funds through darknet markets, non-compliant virtual currency exchanges, and mixers and tumblers, including Bitcoin Fog, Helix, and ChipMixer.

With Morgan’s help, the pair used the stolen funds to buy nonfungible tokens (NFTs), gold, and Walmart gift cards.

Prosecutors have not pushed the judge to give Lichtenstein the maximum sentence due to his assistance in other criminal cases. For instance, in February, Lichtenstein testified as a government witness in a money-laundering trial against Bitcoin Fog.

The pair are scheduled to be sentenced in November.